• Euro reaches key inflection point; tough call from here
• Dollar/Yen remains locked in a very well defined downtrend
• Cable well capped by key 61.8% fib retracement
• Dollar/Swiss needs to hold above 1.0500 to keep recovery hopes alive
• Dollar/Cad reverses sharply to end string of consecutive weekly positive closes
• Australian Dollar showing mixed signals; retain bearish bias with negative cross
• New Zealand Dollar content on adhering to well defined range trade
• Sterling/Yen breaks rising channel support but holds by 20-Week SMA
EUR/USD - While we remain short from 1.4180 from several days back, it is very difficult to establish a clear medium-term outlook for the pair. At present it is unclear whether we are in the process of carving out a medium-term lower top by the yearly highs at 1.4340 ahead of the next downside extension below 1.3750, or are in the process of putting in a fresh higher low above 1.2885 ahead of an eventual break back above 1.4340. A compelling case can be made on both sides and we anxiously await a break of either of these key levels for a clearer directional bias. In the interim, the 100-Week SMA has done a good job of capping gains. POSITION: SHORT @1.4180 FOR AN OPEN OBJECTIVE; BOOKED PROFITS ON 3/5 OF POSITION AND STOPS AT 1.4180 ON REMAINING 2/5
USD/JPY - There is nothing bullish in the medium-term or longer-term for this pair with the market locked in an inter-day downtrend off of the 2009 highs by 101.45 and in a much more defined longer-term down-trend since 2007. We look for a fresh lower top now by 101.45 to be confirmed on an eventual break back below 87.15 over the coming weeks. Any rallies above 95.00 should therefore be used as good sell opportunities. Also look for a break back under 91.75 in the coming week to accelerate declines. STRATEGY: STAND ASIDE; LOOK TO SELL
GBP/USD - After stalling by the 61.8% fib retrace off of the major 1.8670-1.3500 move, the market could be attempting to carve a medium-term top by 1.6745 ahead of a significant drop back towards the 1.5000 level at a minimum. Overbought weekly stochastics are confirming the need for a pullback, with the indicator on the verge of a negative/bearish cross. However, bears might want to wait for confirmation which will be given on a break back below critical support by 1.5800. Only back above 1.6745 ultimately negates. STRATEGY: SIDELINED FOR NOW; LOOK TO SELL
USD/CHF - Much like the price action in Eur/Usd, it is very difficult to determine in which direction the next major move will be. The market has mounted a slow and steady recovery since posting historic lows below parity in 2008, but is under pressure over the past several weeks with the latest consolidation underway just over 1.0500. But for the recovery structure to remain intact, the market needs to hold above the December 2008 1.0410 lows. A 2009 low was recently made by 1.0590 and we look for the latest consolidation to hold above this level ahead of a fresh upside break beyond 1.1025 which offers itself as medium-term resistance. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY
USD/CAD - What a difference a week makes with a string of 6 consecutive up-weeks, 5 consecutive weekly higher highs and 5 consecutive weekly higher lows coming to a dramatic end following the latest sharp drop back towards 1.1100 thus far. However, despite the latest pullback, we still hold a constructive outlook for the pair and look for a higher low to carve out at current levels and above the 1.0785, 2009 lows ahead of renewed strength back above 1.1725 over the coming weeks. Setbacks have managed to stall out by the 61.8% fib retrace off of the 1.0785 to 1.1725 move and we look for this fib to hold on a weekly close basis to reaffirm bullish outlook. A weekly close below the 61.8% fib at 1.1150 will however give reason for concern. POSITION: LONG @1.1205 FOR AN OPEN OBJECTIVE; STOP 1.1055
AUD/USD - Medium term technical studies are conflicting with the market stalling by the recent 2009 highs at 0.8265 and slowing grinding lower since, while the current weekly candle shows the formation of a bullish outside week. Still, we are inclined to hold to the bearish side for now, with price action still showing a potential top, and weekly stochs putting in a negative cross. Key levels to watch over the coming week come in by 0.8160 above and 0.7700 below. The 0.7700 weekly low now needs to be taken out to accelerate declines. STRATEGY: SIDELINED FOR NOW; LOOK TO SELL
NZD/USD - Much like some of the other major currencies, the antipodean is trying to decide whether it is in the process of putting in a shorter-term higher low by 0.6155 or a medium term lower top at 0.6600. And just like the other major currency pairings, we continue to hang onto a USD bullish bias and bearish bias for the pair. However, the multi-week choppy consolidation needs to be broken to the downside below 0.6155 to officially confirm outlook. Back above 0.6600 negates. Here too the weekly stochastics are supportive of our view after putting in a negative cross in from overbought territory. STRATEGY: SIDELINED FOR NOW; LOOK TO SELL
GBP/JPY - While we wrote of a short opportunity earlier in the week with the market rallying to test former channel support and a number of other technical resistance points, it is too early to get real bearish at current levels with the medium-term recovery structure still very much intact. The 20-Week SMA (100-Day SMA) has managed to prop setbacks for now and a higher low could very well be in the process of carving out above 140.00 ahead of a bullish continuation. However, the break of rising channel support off of the 2009 lows does leave room for a potential bearish continuation as well. As such, we will take to the sidelines until a clearer opportunity presents. STRATEGY: SIDELINED FOR NOW; AWAIT CLEARER SIGNAL
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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